1. Identify each cost from the Franchise Profile as a variable or fixed cost and place in appropriate row on the Original Budget.

2. Complete the calculations on the Original Budget. Note: The Operating Budget should equal $153,900.

3. Prepare a Flexible Budget for Scenario 1. Assume Sales and Variable Costs increase by 10%.

4. Prepare a Flexible Budget for Scenario 1. Assume Sales and Variable Cost decrease by 20%. 

Franchise Profile: Original Sales and Cost Data Original Budget Flexible Budgets CATEGORY AMOUNT CATEGORY AMOUNT Scenario 1 Scenario 2 SALES S2,700,000 SALES S2,700,000 COSTS S810,000 S108,000 $540,000 $54,000 S108,000 S108,000 $13,500 $27,000 $5,400 $27,000 $40,500 S81,000 $16,200 $5,400 $391,500 S8,100 $54,000 $27,000 $94,500 $27,000 S2,546,100 S153,900 Food Costs VARIABLE COSTS: Paper Costs Crew Payroll Crew Payroll Taxes Manager Payroll and Payroll Taxes Advertising Promotions Outside Services - Landscaping Linens Operating Supplies Maintenance and Repairs Utilities Training and Travel Cooking Oil Waste Removal Rent and Fees Legal and Accounting Insurance Taxes and Licenses Depreciation Interest Expense Total Variable Costs SO SO CONTRIBUTION MARGIN Contribution Margin % $2,700,000 SO SO 100.0% #DIV/0! #DIV/0! FIXED COSTS TOTAL COSTS OPERATING PROFIT Total Fixed Costs SO SO OPERATING PROFIT $2,700,000 SO SO Operating Profit % 100.0% #DIV/0! #DIV/0!